Key factors in successful project exports
Key factors in successful project exports
As presented in the previous section, international projects are complicated – winning bids, let alone getting through the project cycle successfully, is not a given. The criteria for success in international projects have been studied from various angles, and research findings suggest that successful project marketing is a matter of designing an optimal project mix to address the challenges of complexity, heterogeneity, uncertainty, discontinuity and contextuality (Welch 5, ). This mix comprises the package mix, the relational mix, the strategic mix and the understanding of the milieu (e.g. Welch 5).
The package mix refers to the contents of a project offer, that is, to a technical solution, price, local experience, partnerships, financing, and offset activities such as technology transfer. This offer must be superior to that of any competitors and simultaneously take into account the possible socio-economic concerns related to the project. (Welch 5, ) An important part of the project mix is also the intangible presentation of credibility and assurance on the part of the supplier, as it may take years before the project is completed (Welch et al. , ). Credibility can be generated, for instance, via the use of references, existing relationships and word of mouth (Skaates et al. , ).
The second category affecting the success of international project marketing is what is known as the relational mix, which refers to the development and maintenance of key relationships at all stages of the project cycle (Jansson , for reference see Welch 5, ). In order to scan project opportunities effectively to obtain a first-mover advantage and to supplement its internal competencies with external resources, a company needs a wide network of contacts (Welch 5, ); these will include non-business and socio-political actors, particularly in developing countries (Ahmed ). For example, the required network of actors includes the marketer and the purchaser, financiers, consultants, subcontractors, and governments as purchasers or regulators (Owusu , ). For a small seller company the particular challenge is to not only manage its own network but also to understand the composition of the buying network, which may not be transparent to the company (Owusu and Welch 5). Maintaining ‘sleeping relationships’ can also be a criterion for success if these non-active relationships can be quickly mobilised when a common project opportunity appears. Indeed, project marketing actions are not intended solely for one specific project but for a market of several projects, in which long-term relationships can be crucial. (Hadjikhani )
The third group of factors, the strategic mix, refers to developing and combining anticipatory and adaptive project capabilities (Bansard, Cova and Salle , for reference see Welch 5, ). Anticipatory capabilities are the core of a project company’s ability to operate in differing international markets; they comprise the standardised product and service components that are ready for quick project launches in various situations and environments. Adaptive capabilities, in turn, enable companies to adjust their offerings to meet their buyers’ needs in differing contexts. These include technical abilities, financial abilities, as well as knowledge and contact systems through which companies can adapt project marketing and implementation. (Welch 5, ; Welch et al. , ) Both proactive and reactive capabilities are needed as a part of a long-term strategy: a company needs to actively study the market for suitable projects, use business networks for information and proactively suggest suitable projects to purchasers (Owusu et al. , ).
In terms of the three mixes described above, the performance of a project company depends heavily on its understanding and ability to respond to the local project context. Consequently, the fourth group of success factors – the one perhaps most important in international project marketing – is the
Fig. 7.5 Interactive model of project business Source: Ahmed 1993, 104.
understanding of the milieu. This is because the local political, social, cultural and business context influences projects at all levels. (Welch 5, ; Welch et al. , ) The project milieu includes a territory, a network of actors within this territory, a representation constructed and shared by the actors, understanding of the milieu. This is because the local political, social, cultural and business context influences projects at all levels. (Welch 5, ; Welch et al. , ) The project milieu includes a territory, a network of actors within this territory, a representation constructed and shared by the actors,
Thus, the project seller has to convince other actors of its ability to perform as promised and expected in the milieu (Skaates et al. , ). There are several actors involved in a project, all of whom have their own motives, resources and constraints. In addition, the home and host milieus affect the actions of all the actors (Ahmed , 4), as can be seen in the following comprehensive presentation of project business (See Fig. .5).
It can be concluded that project exports are a complex mode of business. The following section proceeds to illustrate practical experiences in international project marketing.
earlier studies on business in the russian north
During the past ten years, a great deal of research has been conducted on the Russian business environment and business challenges for foreign companies, particularly as regards the general investment climate and concrete business experiences in the Russian market. The main findings of this research are discussed in what follows.
the russian business environment
Jones, Fallon and Golov ( ) explored the obstacles faced by transnational corporations considering FDI in Russia. Their findings suggest that Russia’s relative lack of success in attracting FDI and exploiting its potential benefits can
be attributed to the country’s national infrastructural factors and government policies. The five main obstacles which help to explain the lack of investment in modern Russia are ( ) “Russia’s political and economic culture, and its be attributed to the country’s national infrastructural factors and government policies. The five main obstacles which help to explain the lack of investment in modern Russia are ( ) “Russia’s political and economic culture, and its
Zarkada-Fraser and Fraser ( ) studied the perceptions that marketing managers of British construction firms involved in the Russian market have of political risk and market potential in Russia in comparison with other overseas markets. The analysis showed that the firms did not treat Russia any differently than they did other markets. However, the respondents were found to be highly concerned about the Russian political environment and the uncertain future of reforms. They were also worried about the possibility of government attitudes becoming unfavourable to foreign corporations in the future. The general state of the economy was found to be the second most worrying factor, with the legislative framework being the gravest concern. Aleshin ( ) identified, classified and assessed risks inherent in joint projects in Russia. According to the study, the implementation of projects in Russia is characterised by an environment of high uncertainty and risk; this in turn is due to the absence of a mature market infrastructure and a lack of sufficient experience and knowledge for working under such conditions. The research examined dwelling projects to ascertain their experienced internal risks. The analysis suggests, for example, that establishing closer contacts with the operational services of the focal city and developing information systems among the project participants might reduce risk events. The companies that faced risk events had limited knowledge of the organisation, construction process technology, and the legal basis of investment activity.
Yet business risks, as well as the intensity of foreign business operations, vary considerably between the Russian regions. According to Broadman and Recanatini ( ), the determinants of the geographic distribution of FDI within Russia comprise the economic potential of the region, the development of the local infrastructure, and the local policy framework governing the economic activities, that is, the prices charged by regular utilities, tax rates, customs clearance, and the like. Mögel ( ) divided the Russian regions into classes according to their investment climate. The study concluded that on a scale from (favourable) to (menacing), 5% of the Russian regions belong to classes (undetermined) and 4 (rather unstable). The Murmansk region, located in the Russian Arctic, is one example of a region classified as politically rather unstable. In Murmansk, for instance, legislative stability and proper implementation of agreements, the social situation, and regional development of reforms were seen to be at a rather low level, and the presence of strong interest groups and the internal security and military threat to population groups were ranked high. However, the support for foreign investment was reported to be at the highest possible level (Mögel , 4).
On balance, Russia on the whole is seen to be a somewhat risky business environment, but foreign investors nevertheless find business opportunities there attractive – albeit depending on the region in question. The next section takes a closer look at the Russian North.